On the 27th March 2017, His Honour Deemster Doyle, First Deemster and Clerk of the Rolls, delivered his judgment in Affinity Management Services Limited v Justus Limited. The issue before the court was whether or not to grant a receiver over Justus Limited (the “Company”) when investigations were currently being conducted by the Crown Prosecution Service (“CPS”) in England and Wales into the shareholder of the Company.
The Company is an Isle of Man incorporated company, the shareholder of which being Mr David John Mills (“Mr Mills”). The Company appointed Affinity Management Services Limited (“Affinity”), a corporate service provider, to provide directors for the Company. The main asset of the Company was a yacht valued at €2,350,000.
On 30th January 2017, one of the directors of the Company became aware that Mr Mills had been sentenced to 15 years imprisonment. Consequently, the directors did not want to receive any funds from Mr Mills to fund the Company and, as the Company had several creditors, the decision was made to try and sell the yacht.
However, in order to meet the operating costs and receiving income pending the sale of the yacht, the Company needed to raise some money. The Company wanted to avoid liquidation and so decided the best option would be to appoint joint receivers.
To complicate matters further, a restraint order under the English Proceeds of Crime Act 2003 had been issued over Mr Mills. A restraint order has the effect of freezing property anywhere in the world that may be liable to confiscation following a trial and the making of a confiscation order. The English prosecuting authorities had no issue with the yacht being sold, but that it should be sold subject to the variation to the restraint order and that it adheres to certain conditions. These conditions included the price and buyer and selling fees were to be agreed with the Prosecution in England the selling and that the proceeds from the sale would be deposited into a UK account.
Download the PDF to read the full article: The Appointment of Receivers and the Flexibility of the Manx Court